Outsourcing used to have negative connotations in the payments industry, but that stigma has largely disappeared due to the increasing complexity of electronic payment systems. Many payment pros have found that partnering with key third-party vendors can strengthen their core offerings and preserve valuable resources that can be used to build and strengthen their companies.
One such third-party vendor is Reston, Va.-based Transaction Network Services. The company has developed a payment-centric IP network that reportedly connects over a million retailers to banks, acquirers, payment processors and third-party vendors across the globe.
A TNS case study highlighted the reason why The Co-operative Group, a grocery store chain operating in the U.K., outsourced its payment processing to TNS. The grocery chain had been running its own payment system, but new demands placed on the chain led the company to TNS.
"The Co-operative Group's payment processing platforms had evolved dramatically over the years due to the growth in card payments, new stores and additional payment types," the case study said. "With the added complexity of PCI DSS certification, The Co-operative Group made the decision to simplify its infrastructure and processing systems by selecting TNS to provide a fully outsourced solution for its retail stores and service stations using the ACI Postilion platform."
Justin Latham, Project Manager at The Co-operative Group, focused on the challenges of complying with the Payment Card Industry Data Security Standard in its decision to outsource. "As with many retailers, unmasked card details were being stored locally in the store payment systems, which necessitated a major upgrade of the entire payment infrastructure within The Co-operative Group," he said. "Data center facilities also had to be migrated for business reasons, which added to the scope of work, all of which had to be resolved quickly to enable PCI DSS compliance to be achieved."
Much of TNS' current technology stems from its work with major airline and petroleum clients in global markets. Lisa Shipley, Executive Vice President and Managing Director of Payment Network Solutions at TNS, explained that the complexity of global corporations makes outsourcing a necessity. "When you think about a major retailer who is in the states but they're processing in Hong Kong, all of these acquirers would typically have to have some physical presence in order to get that transaction from Hong Kong back to the states," she said.
TNS is able to bridge these transaction gaps on an international scale. "We have 70-plus countries around the world that we physically can move transactions to and from; and then over 400 different connections to all of the different payment players in the world," Shipley said.
One trend Shipley noted is the push by major retailers to split critical business functions. "They don't want to put all their eggs in one basket," she said. "They want duality." She stated that more often than not, merchants want the payment going to the acquirer and encryption to another party to enhance security. Catering to this merchant preference, ISOs are able to white-label their services with TNS operating in the background.
Based on its experience with providing managed services and ongoing support, TNS recommended that companies choose outsourcing solutions that are platform agnostic, as well as POS system agnostic, which provides smoother and easier integrations.
"We'll actually provide the service flavor that the retailer wants," Shipley said. "If they want a VeriFone solution, that's fine. If they want an Ingenico, ditto. … I think retailers, ISOs and processors are looking at focusing on their core business, which is basically the transaction, and then letting the experts provide things like security, encryption, tokenization, telecommunication services."
As more ISOs and payment processors turn to outsourcing to fulfill critical merchant functions, integrating with a platform provider who can supply a wide range of third-party vendor options globally can make it easier to embrace new entrants and support existing vendors when they introduce the next generation of products and services moving forward. 
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